Evaluating Starknet's Resilience: Can Recent Outages Undermine Its Long-Term L2 Investment Potential?

The Role of L2s in Ethereum’s Ecosystem

Ethereum’s Layer 2 (L2) infrastructure is the backbone of its scalability ambitions. As the network grapples with throughput limitations and high gas fees, L2s like Starknet, Arbitrum, and Optimism have emerged as critical solutions. These platforms promise faster transactions, lower costs, and enhanced user experiences. However, recent outages and technical hiccups have cast doubt on their reliability. For investors, the question is no longer whether L2s matter but how they matter—and whether projects like Starknet can weather the turbulence of rapid innovation.

Starknet’s Recent Outages: A Closer Look

In September 2025, Starknet faced its second major outage in two months, with a four-hour network disruption triggered by the Grinta upgrade (v0.14.0). The upgrade aimed to decentralize the sequencer layer by introducing a three-node Tendermint consensus system but instead caused a sequencer failure tied to incompatibility with legacy Cairo0 code [1]. The outage forced developers to roll back the chain, erasing an hour of transaction history and requiring users to resubmit transactions [2]. This incident, coupled with a 13-minute disruption in July 2025, led to a 4.5% drop in STRK’s price and eroded user confidence [3].

The root cause—technical instability in Cairo0—exposed a critical vulnerability: Starknet’s reliance on centralized sequencers during transitional phases. While the Grinta upgrade was intended to improve block production speed and introduce pre-confirmations, it highlighted gaps in testing and contingency planning [4]. For a project touting decentralization, the outage underscored the fragility of balancing innovation with operational stability.

Comparative Analysis: Starknet vs. Arbitrum and Optimism

Starknet’s challenges are not unique. In 2025, Arbitrum and Optimism also faced outages, albeit with different architectures and outcomes. Arbitrum, with $12 billion in TVL, experienced a 78-minute disruption in December 2023 due to a centralized sequencer stalling during high traffic [5]. Optimism, holding $6 billion in TVL, saw a two-hour outage in February 2024 from an “unsafe head stall” in its optimistic rollup model [5].

The key distinction lies in how each platform addresses these risks. Arbitrum’s BOLD protocol, a permissionless validator dispute system, and Optimism’s modular upgrades (e.g., Delta, Ecotone) have prioritized decentralized infrastructure and incremental improvements [6]. In contrast, Starknet’s reliance on centralized sequencers during transitional upgrades has left it more exposed to single points of failure. While zk-rollups like Starknet offer faster finality and inherent security, their operational resilience remains unproven at scale [7].

Technical Upgrades and Future Resilience

Starknet’s roadmap includes ambitious upgrades to address these vulnerabilities. The Cairo Native upgrade, part of the Grinta release, enables native smart contract execution using Cairo Native (Sierra → LLVM), promising improved throughput and reduced latency [8]. Additionally, the S-two prover—a high-performance zero-knowledge proof generator—aims to enhance scalability by enabling client-side proving on real-world hardware [9]. These tools are critical for handling high transaction volumes and maintaining network reliability.

However, the September 2025 outage revealed that even cutting-edge technology is not immune to operational risks. Cairo Native’s compatibility with legacy code and S-two’s integration into the SHARP proving service will need rigorous testing to avoid similar disruptions. For Starknet to regain trust, it must demonstrate that its upgrades are not just technically sound but operationally robust.

Investment Implications and the Road Ahead

The recent outages have reshaped investor sentiment. While Starknet’s TVL of $3.5 billion lags behind Arbitrum’s $12 billion and Optimism’s $6 billion, its zk-rollup architecture offers unique advantages, including faster finality and lower dispute costs [10]. Yet, recurring outages have raised questions about its ability to support high-stakes applications like DeFi and NFTs.

Investors are increasingly prioritizing platforms with transparent governance and decentralized infrastructure. Arbitrum and Optimism’s proactive communication and modular upgrades have positioned them as safer alternatives [11]. For Starknet to compete, it must address Cairo0 vulnerabilities, accelerate decentralization, and release detailed post-mortems to rebuild trust. The success of future upgrades like Cairo Native and S-two will hinge on their ability to deliver both innovation and stability.

Conclusion

Starknet’s recent outages are a cautionary tale for Ethereum’s L2 ecosystem. While the project’s technical ambitions are undeniable, its operational fragility poses a significant risk to long-term investment potential. For investors, the lesson is clear: resilience is as important as innovation. As the L2 race intensifies, projects that can balance cutting-edge technology with decentralized governance and robust contingency planning—like Arbitrum and Optimism—will likely dominate. Starknet, however, still has a chance to prove that its vision of a decentralized, scalable future is worth the gamble.

Source:
[1] Starknet Is Back Online After Outage: What Happened? [https://www.coinspeaker.com/starknet-is-back-online-after-outage-what-happened/]
[2] Ethereum L2 Starknet Goes Dark for Hours Following ... [https://coinlaw.io/starknet-outage-grinta-upgrade-sequencer-failure/]
[3] Starknet's Reliability Crisis Sparks Trust and Market ... [https://www.ainvest.com/news/starknet-reliability-crisis-sparks-trust-market-concerns-2509/]
[4] Starknet Grinta: Advancing Decentralization & L2 [https://www.starknet.io/blog/starknet-grinta-the-architecture-of-a-more-decentralized-future]
[5] Ethereum Layer 2 Starknet Faces Second Major Outage ... [https://coincentral.com/ethereum-layer-2-starknet-faces-second-major-outage-and-recovery-in-a-day/]
[6] Arbitrum (ARB) Deep Due Diligence Investment Report 2025 [https://www.thestandard.io/blog/arbitrum-arb-deep-due-diligence-investment-report-2025]
[7] Starknet's Recent Outages: A Warning Signal for Ethereum ... [https://www.ainvest.com/news/starknet-outages-warning-signal-ethereum-l2-reliability-investor-risk-appetite-2509]
[8] Version Releases [https://www.starknet.io/developers/version-releases/]
[9] Introducing S-two: The fastest prover for real-world ZK ... [https://starkware.co/blog/s-two-prover/]
[10] Layer 2 Scaling Stats: Arbitrum, Optimism, and zk-Rollup Growth [https://patentpc.com/blog/layer-2-scaling-stats-arbitrum-optimism-and-zk-rollup-growth]
[11] Evaluating the Risks and Resilience of Ethereum L2s [https://www.ainvest.com/news/evaluating-risks-resilience-ethereum-l2s-starknet-outages-future-layer-2-investments-2509]